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Do foreign direct investments accelerate economic growth? The case of the Republic of Macedonia

Author

Listed:
  • Selma Kurtishi-Kastrati
  • Veland Ramadani
  • Léo-Paul Dana

    (MRM - Montpellier Research in Management - UPVM - Université Paul-Valéry - Montpellier 3 - UPVD - Université de Perpignan Via Domitia - Groupe Sup de Co Montpellier (GSCM) - Montpellier Business School - UM - Université de Montpellier)

  • Vanessa Ratten

    (La Trobe University [Melbourne])

Abstract

The aim of this paper is to examine the long-run and the short-run relationships between foreign direct investment (FDI) and economic growth in the Republic of Macedonia by applying the cointegration analysis and error correction model to identify the variables explaining FDI determinants in the Republic of Macedonia. The research further attempts to investigate the effect of FDI on economic growth of the Republic of Macedonia using the methodology of vector auto regression and Granger causality test in this specific country. Out of the general conclusions it is evident that despite the above-average growth rates in both gross domestic product (GDP) and FDI in the country, we have found that GDP does not seem to induce FDI and likewise, FDI seems not to induce GDP. It is possible that the nature of this relationship is influenced by other institutional and economic factors. The paper concludes by offering some suggestions to economic policy makers involved in FDI particularly those in transition economies and high-growth potential areas. Suggestions for future research and implications for practice are also stated in the paper.

Suggested Citation

  • Selma Kurtishi-Kastrati & Veland Ramadani & Léo-Paul Dana & Vanessa Ratten, 2016. "Do foreign direct investments accelerate economic growth? The case of the Republic of Macedonia," Post-Print hal-02017370, HAL.
    • Handle: RePEc:hal:journl:hal-02017370
    DOI: 10.1504/IJC.2016.075903
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    Cited by:

    1. Veland Ramadani & Hyrije Abazi-Alili & Léo-Paul Dana & Gadaf Rexhepi & Sadudin Ibraimi, 2017. "The impact of knowledge spillovers and innovation on firm-performance: findings from the Balkans countries," International Entrepreneurship and Management Journal, Springer, vol. 13(1), pages 299-325, March.
    2. Ramadani, Veland & Hisrich, Robert D. & Abazi-Alili, Hyrije & Dana, Léo-Paul & Panthi, Laxman & Abazi-Bexheti, Lejla, 2019. "Product innovation and firm performance in transition economies: A multi-stage estimation approach," Technological Forecasting and Social Change, Elsevier, vol. 140(C), pages 271-280.

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